If you are repeatedly getting denied for credit or for a mortgage loan, you need to check your credit score and take steps to improve it.
Having a good credit score is pivotal to your financial well-being. Insurers use credit scores to set premiums for auto and homeowner’s coverage and landlords use them to decide who is qualified to rent their apartments.
Here are 5 tips you can use to obtain a better credit score:
Get a Free Credit Report
The first step to raising your credit is knowing what your credit score is and what it means. You can request a credit report from each of the big nationwide credit companies:
• Equifax
• Experian
• TransUnion
By law, you’re entitled to one free report each year. That way, you can learn what is causing your low score and begin correcting any mistakes. Your credit report will show how much money you owe, the number of accounts you have, the type of credit you have, your payment history, and how long you have been using credit. It is important to know these things so you can create a plan of action to increase your score.
Pay Your Bills on Time
Paying your bills on time is one of the most effective ways to achieve a higher credit score. Your payment history makes up 35% of your overall credit score. Late payments will hold you back from obtaining a higher score. If you have a hard time remembering your payment dates, write them on a calendar or add them to your phone.
Pay Off Your Debt
To increase your chance of getting a perfect credit score, you need to pay off your debts. Simply review the debts listed on your free credit report and start paying them off. Debt negotiation is often the fastest and most effective way to get out of debt without filing for bankruptcy.
Keep Your Credit Card Balance Under 30 Percent
One of the factors that results in a low credit score is using a large percentage of your credit. 30% of your score is based on the ratio of your credit card balances to their limits. A good rule of thumb is to keep your credit balance at 30% or lower. A low credit utilization ratio tells lenders you haven’t maxed out your credit cards and know how to manage credit well. If you have several credit card balances, you can consolidate them with a personal loan.
Increase Your Limit or Open a New Account
If you are not in a position to pay down your balances, you can take another approach to improving your credit utilization rate. Call your creditor and request a credit limit increase. If you have maxed out your $2,000 credit card and get a limit increase to $4,000 you’ve instantly cut your credit utilization rate in half.
If your creditor will not increase your limit, apply for a card from a different issuer. This will help your utilization rate since it is based on all your open lines of credit combined. Opening too many accounts at once is not a good idea, either. Apply for only one or two new cards if you are going to use this strategy.
Consumer First Legal Network is a national law firm with attorneys who help individuals and families like you who are struggling with unsecured debts. Would you like our financial counselors to take a look at your personal financial situation? Contact us and we’ll help you begin to turn it all around.
Consumer First Legal Network, LLC
Harold E. Stafford, Esq.
Managing Member
Licensed in Wisconsin
6918 Avalon Lane, Madison, WI 53719
Phone: 866-552-9492, Ext. 2
E-mail: hstafford@c1ln.com
